Gov. Haley Barbour told Gulf Coast business leaders that Mississippi could lose $1.6 billion in Hurricane Katrina recovery money by Sept. 1 if rebuilding from the 2005 storm doesn’t pick up.

Barbour spoke Wednesday to a meeting of the Gulf Coast Business Council in Gulfport.

He said unspent Katrina funds total about $2.8 billion.

Barbour said spending the remaining hurricane recovery money will create an estimated 18,000 jobs on the coast.

Barbour said municipal and county governments have been advised, by letter, of the Sept. 1 deadline for grant projects, which total $1.6 billion. The projects include community revitalization, utilities and work at the Port of Gulfport.

He said another $1.2 billion in Federal Emergency Management Agency assistance is unspent for work such as debris removal.

“I am proud of the progress that has been made, but we all know that we have to step it up a notch. We have to take another step down the road in rebuilding the Mississippi Gulf Coast bigger and better. I’m not trying to be critical, I’m just trying to be honest about what we have to do,” Barbour said.

Barbour said housing remains the biggest issue on the coast. Affordability is the issue now, rather than availability, he said. Low-cost single-family houses and apartments were “obliterated” by the storm, he said.

Barbour said there are $924 million worth of FEMA assistance projects in the three coastal counties of Harrison, Hancock and Jackson. He said that includes $87 million for recreational facilities, $34 million for roads and bridges, $221 million for public buildings and $582 million for public utilities.

“I’m not going to ignore the risk the state is going to have money taken back from us if we don’t spend it,” he said.

Moss Point Mayor Xavier Bishop said one issue delaying local projects is that engineering firms are strained by the amount of hurricane recovery work.